The best personal loans have competitive interest rates for your credit profile, and provide the loan amount and repayment term you need. Rates generally range from around 7% to 36%, with the lowest rates reserved for borrowers with exceptional credit (a FICO score of 800 or above). If you're able to improve your credit before applying, you can improve your rate (more on that below). 

Either way, prequalify for a personal loan first to get a sense of rates you might be eligible for and which lenders are most likely to approve your application. And check out average personal loan interest rates, according to Credible data, to avoid surprises.

To find the best personal loan, prequalify with multiple lenders to compare customized rate quotes. Prequalification is a good first step since it won’t hurt your credit score and can usually be done in minutes. Just note that prequalification is not an offer of credit, and once you formally apply, the lender will conduct a hard credit check that could temporarily ding your score.

We evaluated the best personal loan lenders based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Read our full lender rating methodology for more information.

Here are the main factors to consider when comparing personal loans:

• APR: When comparing personal loans, it’s crucial to compare annual percentage rates (APRs). This is because some personal loans carry an origination fee, which is an upfront fee charged as a percentage of the loan amount — the APR accounts for upfront fees and the interest rate, whereas the interest rate alone does not. The lower your APR is, the lower your borrowing costs.
• Loan amounts: Lenders offer different loan amounts that can range from less than $1,000 to over $100,000. That doesn’t mean you’ll necessarily qualify for the highest loan amount offered, however. That’s dependent on your income, credit score, and current debt-to-income ratio (DTI).
• Repayment terms: The repayment term is the number of years you'll have to repay the loan amount. Longer terms result in smaller monthly payments but higher interest costs overall, while shorter terms result in higher monthly payments but lower interest costs. The best term for you will depend on your budget and preferences.
• Fees: Lenders may charge one or more fees, such as origination fees, application fees, late fees, or insufficient funds fees. These add to your total borrowing costs.
• Cosigner and secured loan options: A cosigner with a good credit profile can help you qualify if your FICO score is fair (between 580 and 669) or poor (below 580), but they’ll be responsible for making payments if you can’t. A secured loan is one you attach collateral to, and may also help you qualify with fair or poor credit, but you can lose your collateral if you default. If you're interested in either, look for a lender that allows them — not all do.
• Time to fund: The amount of time it takes a lender to approve your application and send you loan funds also varies. Some lenders offer faster access to funds (as soon as the same day), which can be important when you need money fast.
• Customer service ratings: Different companies provide different levels of support. You can gain insight into a lender’s customer service by checking ratings left by past borrowers on sites like Trustpilot and by checking the company’s rating with the Better Business Bureau (BBB).
• Overall cost: Use a personal loan calculator to compare the total amount you'll pay in interest and fees over the life of the loan. A lower monthly payment doesn’t mean a loan is cheaper overall.

Pros and cons of personal loans

Personal loans come with many benefits, especially if you have good to excellent credit — but there are also a few drawbacks. Here's what you should know:

Pros

• Wide selection of lenders: Many banks, credit unions, and alternative lenders offer personal loan products, which means you have no shortage of options.
• Easy application process: You can often apply online within a matter of minutes and get a loan decision the same day.
• Fast funding time: Many lenders offer fast funding times. Without any collateral, you may be able to get your loan funded within a day or two.
• Relatively low cost: If you have good to excellent credit (a FICO score of 670 or higher), you may be able to qualify for an APR lower than the APR on your credit cards.
• High loan amounts: Borrowers with good to excellent credit and high income can get approved for high loan amounts, over $100,000 in some cases.
• No collateral: Most personal loans are unsecured, meaning you don't have to pledge collateral to back the loan.

Cons

• Higher APRs than secured loans: In comparison to secured loans, which use collateral such as your house or car to secure a loan, the APRs on unsecured personal loans are often higher. Lenders take on more risk since there’s no collateral attached.
• Origination fees: Many lenders charge origination fees, which can range from 1% to 12% of your loan amount. These are more common in loans for subprime borrowers and will be higher for borrowers lenders think pose more risk.
• Shorter terms than home equity loans: The repayment terms on unsecured personal loans are often shorter than those on loans secured by your home, which can result in higher monthly payments. If you need a repayment term over 10 years, a home equity loan may be a better fit.

Interest rates remained unchanged per the last Fed policy meeting. There’s less confidence we’ll see three by the end of the year, as earlier anticipated. However, the Fed announced that one rate cut is likely, given cooling inflation per the most recent CPI report. 

But the fed funds rate — which is the benchmark set by the Fed and what banks use to determine consumer loan rates — isn’t the only thing to consider. Demand for loans has increased and is expected to increase further, according to a Fed survey of senior loan officers, while consumer debt is reaching new highs. As a result, lending standards have tightened, which means banks are being more selective about who they make loans to.

In other words, even if rates do go down, qualifying for a loan may be more difficult for many consumers, which can mean higher rates. One thing we do know is that the best way to get a low interest rate is to improve your credit score and lower your DTI before applying. Keep in mind that if rates go down after you get a loan, you may be able to refinance it to benefit from lower rates.

Personal loan lenders require borrowers to meet a variety of eligibility requirements. While they vary from one lender to the next, most will consider the following factors:

• Location: Some lenders don’t serve borrowers in all states. To qualify, you must live in the service area of the lender. Proof of residence may be requested.
• Citizenship: Most lenders require that you’re a U.S. citizen, permanent resident, or non-resident alien with a valid driver’s license or state ID.
• Age: You must be of legal age in your state.
• Bank account: You often need to have an active, verifiable checking or savings account.
• Minimum credit score: Lenders pull credit scores from one or more of the consumer credit bureaus and often require your credit score to be above a certain minimum.
• Credit history: Lenders consider information from your credit reports, such as your payment history, credit utilization, credit account lengths, recent credit inquiries, credit mix, and public records. Negative marks could increase your rate or make it harder to qualify.
• A verifiable minimum income: Income is also a factor, as lenders need to know the monthly payment amount you can afford. A minimum amount of monthly or annual income may be required.
• Income source: Lenders also often ask about the source of your monthly income (e.g., pension, employment, self-employment, etc.). In the case of employment, they may require a minimum amount of time at your job.

Many lenders list eligibility requirements on their websites so you can check them as you shop around. The quote process is also fairly fast with most lenders, and often doesn’t require a hard credit check. You can prequalify and find out within a few minutes if you're eligible or not. Keep in mind that the rates you’re offered during prequalification aren’t an offer of credit and may be higher when you actually apply. The lender will also conduct a hard credit check when you apply, which could temporarily ding your score.

Related: Personal loans for non-US citizens

Personal loans are often unsecured, which means you don't need to pledge any collateral to borrow the money. Instead, lenders base approval largely on your credit profile and income. As a result, they may require you to have a credit score above a certain minimum.

Here's a look at minimum credit score requirements from a variety of personal loan lenders. These minimums may be on their own website or via personal loan marketplaces.

If you can increase your credit score before applying for a personal loan, you could potentially lower your interest rate, which could save you hundreds or even thousands of dollars over the term of your loan. The more time you have to do that, the better. But there are a few quick ways to improve your credit as well:

You can apply for a personal loan online with most lenders. Many have a prequalification process that precedes the application and lets you see an estimate of the rates you might qualify for.

If you prequalify, the lender will provide an estimate of the loan amount, rate, and term you may be eligible for based on your credit and profile, along with options for loan terms. As noted, prequalification only requires a soft credit check, so it won't count as a hard inquiry on your credit report. It also isn’t an offer of credit, so your final rate could be higher. By prequalifying, you can compare personal loans from multiple lenders without hurting your credit score.

Once you’ve identified the best personal loan, complete the loan application process with that lender. In the final stages, you’ll need to submit documentation to confirm your personal and financial information, such as pay stubs, utility bills, proof of employment, and tax returns. 

Upon approval, the lender will provide a loan agreement for your review. If it’s satisfactory, sign the agreement for the loan to be funded. The lender will let you know when to expect a direct deposit of the loan in your bank account. If you’re using a personal loan to consolidate debt, the lender may send funds to your creditors directly.

You can get the best low interest rate personal loan by having excellent credit and, most importantly, shopping around to find the best deal. Each lender has different underwriting requirements, loan amounts, APR ranges, and fees — which means some lenders may offer you a lower interest rate and better terms than others.

Credit scores play a large role in whether you can get approved for a personal loan. They also help lenders determine the amount you can borrow, the length of your repayment term, and your borrowing costs. The better your FICO credit score, the better your chances of getting the best personal loans.

To get a personal loan with bad credit, you’ll need to check out the minimum credit score that lenders require — and make sure it’s lower than yours. Also consider applying with a cosigner who can help you qualify for better rates and terms, or finding a lender that offers secured personal loans. Once you’ve found a few potential lenders, prequalify to compare rate quotes side by side to find the best deal.

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